9781422284360

I NTRODUCTION

Overall, the commerce of the region with the rest of the world is unhealthy. Oil exporters tend to be one-product economies highly vulnerable to fluctuations in global prices. Labor-rich countries depend too much on remittances from workers in the European Union and the oil-producing countries of the Gulf. Some of the excess labor has found employment in the jihadist sector, a high-risk but up and coming industry which pays decent salaries. For the poorer states of the region, jihadists are the ticket to foreign strategic rent. The Middle East got a taste for it in the early days of the Cold War, when either superpower provided aid to those who declared them- selves in their camp. Since then, foreign strategic rent has come in many forms: direct military aid, preferential trade agreements, loan guarantees, financial assistance, or aid programs to cater to refugee populations. Rent never amounts to more than a few percentage points of GDP, but it is often enough to keep entrenched regimes in power. Dysfunction becomes self-perpetuating: pirates and jihadists, famine and refugees, all bear promises of aid to come from concerned distant powers. Reforms lose their urgency. Turkey and Israel have a head start on the path to modernization and economic maturity, but they are, like the rest of the Middle East, consumed in high stakes politics that hinder their democratic life. Rather than being models that would lift others, they are virtu- ally outliers disconnected from the rest of the region. The clock is ticking for the Middle East. The window of opportunity from the demographic transition will eventually close. Fertility is already dropping, and as the current youth bulge ages it will become a bur- den on the economy. The outlook for capital is also bleak. Oil is already running out for the smaller producers, all the while global prices are pushed downwards by the exploitation of new sources. The Middle East has a real possibility to break the patterns of the past, but the present is when the transition should occur.

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